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Friday, December 10, 2010

4 DAY RULE

If the market can end the day with a gain we will get a 4 day rule possible trend change signal.

The four day rule says; After a long intermediate rally look for the first down day to signal an intermediate trend change after the market rallies 4 or more days in a row.

The four day rule is a sign of extreme sentiment. I would caution that it only works after a long intermediate rally lasting multiple months. We have those conditions right now. We have also reached extreme bullish sentiment levels. The kind of levels where we are in jeopardy of running out of buyers.

Add to that the fact that the intermediate cycle is now going on it's 23rd week and we got a large selling on strength day a couple of weeks ago (a sign institutional smart money is exiting in front of a large correction.) and we can probably expect any further gains to be given back and then some when the market moves down into the intermediate degree correction.

Now is not the time to press the long side in either stocks or gold.

That doesn't mean one should short. Shorting bull markets is a tough trade. You have to time the exit perfectly and survive the violent fakeout rallies to make money. Not to mention you will invariably miss time the entry several times. All in all you will probably be better off just going on vacation for the next 5-6 weeks.

336 comments:

I have been following Gary's view for quite some time ( 8 months) and his track record is fantastic...To be fair, being so right is amazing, Gary must be multimillionnaire and I don't get why he doesn't spend the rest of his life in Maui!!! :-)

Wes,The market is just in the timing band for an intermediate correction and sentiment has reached bullish levels where we are running out of buyers.

I'm confident though that QE2 is going to lead to at least a minor currency crisis this spring. It's not possible to discount QE. It's new money hitting the market. That liquidity has to land somewhere.

At the moment it's staying in cash because the market is due for a correction but once the correction has run it's course we will see a flood of liquidity rush into asset markets.

@MLMT...I would start by saying, we are not "going back to normal" and are going through a paradigm shift of epic proportions. Therefore, the old models are not useful. #2. CB's, particularly Asia and non western CB's have no desire to continue the ponzi scheme of US dollar reserve. Their populations don't either. These countries and people are creating real wealth while we create "debt" wealth. #3 1388 is the inflation adjusted high from 1980. Why do you think the battle is in this area. We have only just begun.

As someone who caught the proverbial knife in 2008, I bought pm stocks at 50% off their highs only to see my positions lose another 80%. For instance I bought SLW around 10 only to watch it go to 2.50. I bought NG at $3.00 only to watch it go to $.50ish. I watched my portfolio shrivel away to unimaginable levels. I never sold a share (except for NG, which looked like it was ready to go BK), but kept on buying, picking up more SLW for $4.50 a share and riding it back to $40.

So the answer to your question is: I will NEVER do that again. The line in the sand for me is the 200dma. If gold crosses under the 200dma (now around $1200) I will blow out the whole portfolio and wait for it to trade above that level before buying back in.

So your point is a good one: when I read people saying "hey, AGQ can't go below $128", I want to tell them that it can go to single digits. These are not widows and orphans stocks. When the D-wave hits, people will find out how unforgiving these stocks can be.

yes , i have been doing it for 10 yrs and got burned a few times i, but i learned from it too ( guess that was called paying my tuition :)

you can make good money in some of those small companies , but pick 'producers' with good results ..AFTER A PULLBACK , and good volume on the way up.and only when Gold/Silver /etc is in a confirmed uptrend ( or now when Gary shows where we are in the cycle timing).

Its not for everyone , but I do my research , buy and SELL when the time comes. :)

Also is it me or does the right hand of Melissa Lee, the center Asian woman, appear to be posed? I see these all the time from ones "in the club". IMO nobody naturally stretches their fingers as far apart as her:

Sophia - I've been following Gary for a couple of years now and his track record is, as you say, fantastic. He's very modest about it and will deny this to the bitter end, but I've yet to meet a better market timer! I wish I had listened to him back then as much as I do now - it took me a while to come around to his methods and I am the poorer for it. But better late than never, eh?

Alex: I never trade such things. Let me know your perspective on the following thoughts...Making 50% is great but I'd never put more than a little into one of those tiny miners. I'd rather make 30% on $200k than 200% on $5k. Do you really put a lot of your net worth into such things? I can load up on GDXJ or SIL, but would be terrified to put that kind of money into $1.50 miner, or even into a basket of ten of them. What am I missing here?

i dont think you re missing anything here...we just do things differently.

I don't short bull markets ever, but I've heard that you do. Its easier to lose money shorting a bull with the constant upside surprises ,even with stops it chips away at your funds ( unless as you say , you just put a small % on it) but you keep trying. Its your style..it suits your desire to be an active trader.

SLW was under $5 --2 yrs ago , over $40 recently. It was a small cap miner. NG recently doubled , EXK recently doubled ( both in 6 months). Its all about what you are comfortable.

so since we are now stripped down waiting for the correction , it doesnt hurt to throw $3000 on a small cap IF the chart looks good ( I base trades mostly on volume breakouts//big volume right before a break above consolidation.

now go look at NAK and PGZ today- I kept these in my core for the volume rising toward a break area in a 2 month consolidation...volume was always up on the way up, light on the way down...if they fail , cut losses quick , but..now they will be sold. :)

5,000 TZA's @ 16.16. 2% Stop, no tolerance down, looking for a drop next week. $RUI is very extended, up 32% in 12 weeks and will likely drop most on the other indexes. Looking for 15-20% on TZA over 2 weeks (3x ETF)

Damn Poly, very nice buy today. That is the bargain of the century, almost. I got 5k+ but not that cheap! The RUT is OMG extended- up to 2006 levels! It should drop real hard. You'll get 40% in the next month is my guess.

All-the gov wants the stock market up-newly created $100B/month goes to primary dealers who can do whatever they want with it including levering it up 10, 20, 30 times(I don't know the real number anymore)-this is open ended, no upper limit, no approval from congress -- nothing (until someone stops the madness, and I have no idea how that will happen). - the gov knows they will devalue the $ so they need to get the rich more $ so they will retain their status.

Why does everyone keep applying old rules to the stock market that has these conditions? This is the biggest ponzi scheme ever invented. Like so many are saying about gold, it has a long way to go.

Re: primary dealers 'rumour' (if that is what you are referring to), here's a link with the schedule and a note:

"...this current schedule adds up to another $117B in brand new, fresh greenback for the PDs to play with over the course of the next four weeks. My advice to you is simple: Be long or be out. Do not attempt to be "Mr. Smartypants Topcaller" and try to short anything. "

Hi- hope you dont mind my two cents here..I looked at what you were pointing out ,because I was interested in what you were seeing. It seems that Garys observation was that previously It 1st PLACED the 3 yr low, then broke up through the ema200...and it NEVER had broken up through the ema200 after placing other lows...it was rejected.

BUT he wrote that in Jan 2010 , and if you look at the dollar chart , what he observed actually changed in Late Jan 2010 - that very month that he stated that,after placing a minor low.

It was only on yr 2 it actually went up and DID break above the 200ema...going as far up a the 88 area. BUT... at that point it wouldnt be a dollar 3yr low , because it was only 2 yr after the 2008 3 yr low.

It seems that his statement (observation at that time)that a bounce in the dollar wasnt going to break above the ema200 , because it was not coming off of a major 3 yr low... was quickly undone the following month.

I would still like to hear what Gary has to say too..just wanted to add that in here at the time-hope you dont mind.

I recently thought 80 would provide enough resistance to turn the dollar back down. But the dollar sliced right through that like a hot knife through butter.

I think the forces at work in the currency markets are so large that any technical analysis at this point is probably hopeless as different countries try to weaken their currency against their neighbor.

I don't think we've seen the three year cycle low though. Last month was too early as the average has been about 3 years and 3 months.

I also don't think we've seen the top of the bounce out of the yearly cycle low yet because the stock market still hasn't dropped down into an intermediate cycle low of any significance.

My best guess is we will see the European and Korea issues come back into the spot light soon and the market will enter a sizeable correction bottoming in Jan. or maybe even as late as Feb. like it did last year.

At this point I think we can probably bank on another stretched cycle due to the Fed's meddling and positive seasonality.

You mention a likely bounce from the daily low in gold. Where do you think this bounce will take us? Is it likely that it will challenge or make marginal new highs? Also what would the normal timing for this to occur? Lastly, is there any reason to think silver will act differently?

The stockmarket broke up friday like I mentioned the copper development could indicate. The 1220-1230 level was strong resistance, in fact 'the mother of all resistance' since the Lehman crash occured from there. Now this level once penetrated may subsequently turn to support. But the market is overbought for sure, for instance on the Arms-ratio (Trin). Btw, here the charts for gold and silver 1979-80. The developmens after the end of november is somewhat special..

Gary I'm a holder of GLD , core and only position ,1 k shares, since May of '09 . I'm sorry if you had this question already but whats your target of selling out my core position approximatively in say price range . I know you don't agree with it but I hold much more in DBO .Any idea were oil will top out too Gary ? You dont go into oil much on your reports . thank you sir , Jake

I don't do much with oil anymore because it's no longer in a secular bull market.

One of the mistakes investors invariably make is to go back to the leaders of the last bull market because they were treated very well by those stocks or commodities before. So they expect it to happen again.

Just look at tech stocks. How many people kept buying the Nasdaq during the 02-07 bull? The Nasdaq never even got close to the all time highs and still isn't.

The same thing is and will happen with energy.

Regarding GLD; You should continue to hold a core position. I'm just reducing at this time so I will have some dry powder to put to work when the intermediate cycle bottom comes, but I still have a core position.

I enjoy it when you project the charts out a year or so, thus was interested to see your calling for an $SPX top next April, then a sharp decline into late 2012. But my question is: if this plays out, wouldn't gold and certainly the $HUI decline, too, or do you see the pm's completely decoupling from the stock market?

They have been pretty much moving in lockstep all this year, so I don't see how gold/silver stocks could hold up in the face of a market smash in 2011/12.

Interested in your views on this and thanks for a great market letter.

Absolutely right, Gary. Just spent half an hour on Stockcharts comparing the S&P and HUI and the exercise confirms what you said (also found that from April 07 to March 08 the HUI was up 70% while the S&P was down in that timeframe.

I guess recent history has conditioned most to think that pm stocks are always going to parallel what the stock market's doing. Just ain't so as you point out.

"We have already seen a long-term bottom in USD and a long-term top in PMs?"'

Go short with 20% of your trading capital after there's an extension of 10 more points, beyond the 1365 target? So the odds are high then that the extension will continue, and stay with it until the next target number, below, bottom of the uptrend channel, and then shorten the stop range so you'll get dropped after a profit, and if it collapses, you're on board.

Expect a trading risk of say 10 points above the low. Watch to see the way the market bounces off of 1365 and if it's too fast, then leave the trade after 5 points. Or if it looks like it's a slow domed arch, let it go to see if it creates a right shoulder down?

As to the balance of one's capital, diversification in AU, CA bond funds to offset the USD, say 25%, and the rest exposed to US gov bonds, short or medium term, and a call option on the USD for the gamble, say 2% with the goal of 5 times the cost?

the failure to pass the tax extension package early next week might be the catalyst we are looking for to bring some serious profit taking. It looks like they might vote against it and wait for the rep to take over in jan to implement a new policy.

I have some interesting discussion I'd like to kick off. It concerns cycles and whether they become significantly less useful as a bull progresses (towards mania top).

We have two recent past bubble/mania examples - real estate and tech stocks.Real estate doesn't really have chart data you can use for the sort of cycles we follow, so stick to tech stocks and approximate with the $NDX index. See this chart:

http://img256.imageshack.us/f/ndxrunaway.gif/

This is the naz for the last 5 yrs or so of the tech bubble. I've made a number of notations.

Clearly, up until about mid 1998 the naz had daily and intermediate (RED CIRCLE) cycles. It shows a rather continuous progression higher (ORANGE line).

Then, lateish 1998 the market accellerated (2nd ORANGE line). Note this chart is LOG so that the slope shows the percent compounding. From last 1998 onward the market took off into it's final (and most profitable) run.

What I want to highlight and discuss is that when the market changed in phase (and "character") at the 2nd orange line, not only did it move up much quicker, but it ALSO STOPPED having much in the way of intermediate cycles. They disappeared, or became *significantly* reduced.

In fact, it is pretty clear that:a) playing intermediate cycles was seemingly useful and profitable before late 1998, butb) it pretty much left you behind afterward. Eating dust.

My concern with this example (applying to gold/silver) is:

1) I think the nature of precious metals market has changed in the last year or so. I think there is a different amount of money and we are in a different "phase" (phase 2 by many definitions - obviously we aren't in the 'mania' phase yet.

2) With the change in nature of the metals (now) and with a certain change in nature in the future (mania), this example would seem to indicate that cycles might not work out as we expect. That there might be a time, if not possibly **already started**, where the cycles disappear or become not very useful.

Any thoughts? Do we risk being left behind now or in the future by selling to core for an expected 'intermediate' pullback that might not come? Can we identify this 'runaway' phase when it happens and stop trading? Is there something about the $NDX/tech that makes that example unique? Are there other examples that might show if this is unique or not?

As a challenge (no slight intended), let us assume Gary and Doc and others came to use and learn cycles only for THIS current phase of the metals. Maybe they haven't/didn't use them for previous manias. Maybe they stop working at some point? Maybe they don't know or realize this cause it hasn't happened yeat in their lifetime trading experience? Maybe we have a few more successful cycles before we need to simply hold? Maybe the runaway phase is already here?

I saw that Bob Hoye thing. On closer inspection, it predicts very little.

It seemed to have missed the 2000 tech bubble collapse entirely. And yet it predicted something or other in 2004 -- "housing rate of change" -- meaning what? That the housing market was really taking off, but that the bubble wouldn't burst for another two years? It predicted "narrowing spreads in Euroland" in February 1998, but LTCM didn't happen for another six months. This is very loose correlation, not causation.

In short, Hoye's "system" gives a signal, and then he finds something after the fact to explain what it was signaling. This is a pretty easy trick, because there's always some crisis going on in the global economy.

And you can bet that there's going to be a crisis in the next six months, given that we're already in several of them (Ireland, the bond market reversal) and any of these crises are more significant than "Housing Rate of Change". Hoye will have no problem proclaiming the rightness of his system when Spain gets into trouble or the bond market backs up.

In short, this is the kind of pseudoscience that newsletter writers like Elliot Wave use to bilk people -- predicting disaster is always good for sucking people in.

>The reason you can't determine the cycles is because you are using a log scale. There ws an intermediate low in March 09 that dipped 14%. Another in Aug 99 the dropped 14%. And then the final parabolic run that extended all the cycles.

The log chart would show the same size movement (in %) throughout. So there is still a clear deviation between the early and late portions.

Nevertheless, I wasn't proclaiming to be cycles proficient. I turn to you for that. If you believe that situation was playable either with closer examination, extended cycles, or use of SPX instead, then I believe you. I just wanted your take on it and whether it was highlighting a dangerous area for us in the future.

What do you think about the dollar breaking down this morning? Not to analyze the squiggles, but going below that little support level at about 80.07 or so is disconcerting to me. If we go below the daily cycle low do you get back into PMs, assuming that the dollar is toast and resuming it's drop into the 3 yr low?

This is exactly what the "risk" is right now in being out of position in PMs - and short the stock mkt for those who are, though I think stocks can definitely fall into an interm low no matter what the dollar is doing, given the bullish sentiment, etc.

Hopefully I just bottom ticked a short term move on the dollar with that comment. LOL

Stocks didn't react much to that little free fall, but PMs sure are, and it's making us core only bulls uncomfortable. :-) But this would be a normal and classic mid-interm cycle decline bounce and so I'm certainly not chasing here.

This stock market is ridiculous. POMO has ended, and yet no sign of relief. With seasonality on the side of the bulls, and sentiment extreme, I wonder how this plays out...should be interesting to say the least.

Well it's not over yet trond. It's still quite risky to be long here. We're very vulnerable to a nasty and abrupt fall at any time. Calls are being bought hand over fist again this morning (see ISEE). Yes, it may be a good short term bounce, but we'll see how it plays out over the next couple weeks or so.

Friggen' dollar is melting down this morning. But given it's nasty spill, it's still a pretty muted response, relatively speaking, in the PMs, and especially the stock mkt. The pull of the interm cycle vs. the decline of the dollar.

There are so many indications of hysterical bullishness, this is not going to end well. Amazing. Yet the Fed is pumping in another 7-9 billion today. I just keep waiting for a clue it's over...and waiting... Have lost tiny bits on the way up on the short side. I have found that usually, for me, if I probe more than a few times, when then move finally comes it's a whopper. NDX tends to crack big in January for some reason, so maybe then...?

The other thing that seems notable here is the bearish sentiment evident in bonds lately. I don't have any empirical data at hand, but the "bond bull is dead", etc. type stories have reached a very high level of late.

Regardless of what the longer term holds, it seems like we ought to be near a significant bounce (even if it's a dead cat type, like the dollar has had), and that would go well with an equity correction.

Yeah, I understand and agree. I just don't like to go around soliciting that stuff from others as it makes me feel a bit cheap and, well, just wrong. If I really want it I should just subscribe. I used to subscribe there but dropped it a while back. I'm debating getting it again.

This week the CFTC is holding open talks about position sizes, and thats one of the things everyone's been bitching about.. JPM is short 18% of the entire worlds production of silver. it's all naked too, they don't have the silver laying around as a hedge. That's how they've been manipulating it.

Question, if for once the CFTC grows a set balls and sticks to the legal limits, Would it cause silver to pop? I believe the meeting is Thursday.

The plan to get back in is clear enough on the downside ... but let's face it even Gary and cycle analysis can be wrong this time so IF that happens and the PM's continue higher ... when do we decide that it's time to get fully in again?

New lows on the NYSE have ticked up significantly over the last couple of days and are shooting up quite a bit today. Showing that breadth is breaking down at these higher highs. It's interesting because we didn't even see this at the Apr or Jan tops.

That said, it's not reflecting in the NASDAQ figures, and so I thought that it could just be the interest sensitive issues (i.e. bond ETFs, preferreds, and all the other things that tend to "pollute" the NYSE breadth data).

But bond yields are down across the board today so it doesn't really make sense. Hard to say but it's something to watch.

I was expecting to see a lot more seeling into strength today, but the numbers on the SPY are not what I've seen mark intermediate tops. Looks like we may have a little further to go. I'm thinking I'll take a small short position on the S&P if we get a good SoS day. Just to spice things up a bit. Waiting bores me. Anyway, it seems like a pretty good bet if it materializes.

Robert: There was a huge (-$400 million?) SoS day 2-3 weeks ago. Gary has pointed out that it is a poor short-term timing tool, but that it does show the big money heading for the exits. According to the studies he has done, another is not needed. The fact that we have been rallying since it hit is a pretty good indication of its non-short-term predictive value, I guess.

DG, what I was trying to tell Fusby, is that SoS without volume considered can be misleading. I look at the -73 million in SPY today as significant with SPY volume only 70% of its average. Also it seemed as if he, Fusby, was saying that this is the first SoS in awhile. More like this will be the last SoS in awhile (likely) if the market begins to drop.

Regarding moving the email and using an "SMT" header type trick, we all know and LIKE that you are friendly and corresponding and answering questions. This won't substantially change that. The issue is that the #1 thing that stands out on the front page of your blog is a big email address. It is only natural a large mass of people will STOP doing anything else at that very point, CLICK IT, and write to you. By the design of your page, that is what you are encouraging - to your detriment.

Move the email so they have to read and learn before contacting you. Either way you construct it, the people will follow. Construct so they answer their questions first and many fewer contacts should result.

And there is nothing wrong with encouraging the posting of question on the BLOG instead of emailing you. You can put that in the FAQ: "Please consider posting your questions to the blog INSTEAD of emailing me. There are probably others with the same questions and you will likely get a quicker response assuming I can get to your email at all. I prioritize incoming emails for subscriber specific issues and cannot provide personal investment advice."

etc.etc..It doesn't have to sound mean, but if you are being burdened, then bone up a bit and level with people on what you are willing to accept or not.

At the last intermediate top in mid July..ish I saw several days with more than 100 million SoS in the SPYs and >100 million SoS on several other issues. With sentiment as frothy as it is, I suspect there will be a day with high volume in which institutions hand over positions to retail traders and that will give us high SoS numbers. On such a day, if it occurs, I will initiate a small position short (appx 10% of portfolio). I will likely add to the position by a couple % with each successive SoS day.

If no SoS day occurs prior to drop, I'll wait and see what kind of set up develops. Perhaps I won't get short due to lack of a high odds trade. We'll see.

and continue life as you have it setup with no issues. So you can keep working as you are. But LATER a simply redirect again from the registrar can send everything to gmail, or hotmail, or hong kong or canada, or wherever. Flexible.

From 10/28/10-12/13/10 we've had a total negative outflow (SoS) in the SPY of 1,160 ($1,160,000,000 USD). Since 10/28/10-12/13/10 we've had a total positive inflow (BoW) in the SPY of 35 ($35,000,000 USD). The net is then an outflow (SoS) of $1,125,000,000 USD from today since 10/28/10. I disregarded anything under 20 million (although upon first glance at each date from 10/28-today I didn't see any).

IMO -1,125 money-flow in the SPY constitutes enough SoS for an intermediate top in the short-term.

It is also important to note that SPY on 10/28 (the lowest share price on SPY throughout the dates covered) was close to 118.5. This entails that an intermediate correction should drop significantly lower than 118.5 (or 1185 S & P 500 or thereabouts). 5% under 1185 is 1125, so I would not be surprised if the correction brought us to that area. That is almost a 10% drop in the SP500 from today's closing price which is not uncharacteristic of an intermediate low.

The largest SoS days from today to 10/28/10 were 10/28 (-151), 11/29 (-582), and 12/1 (-123).

*Correction on previous post. There were some small SoS (under 50 million each) that came up on 10/22 and 10/26. If those are disregarded the total net of SoS and BoW for SPY from 10/28/10-12/13/10 is approximately -1,055 million.

Avann,This late in an intermediate cycle I would never go back to a full position. Just let yur core catch any upside that may be left.

Steve,I never short a bull market. It's too hard to time the top and tough to time the bottom. On top of that the percentage gains are tiny so a couple of misses on the entry and a miss on the exit and all you've accomplished is to whittle away at your cash.

This is just one of those trades that is better left for someone else.

We've made a killing over the last few months. Be happy with your gains, take some time off and take the family on a nice vacation.

Wes, you are correct. I did realize that throughout gathering the numbers for that post. I didn't mention it because I know that it has thoroughly been discussed already here on this board, but should have anyways as a reminder.

That said, the same holds true for all previous SoS and BoW numbers we have taken off the WSJ site and discussed, and patterned to IT tops and bottoms. I calculated, some time ago, the April SoS and it too was over and close to the 1 Billion mark on they SPY.

In the last report, the weekend report, you mentioned that on the next daily cycle we might exceed this intermediate tops' high (on the major equity indexes), but then that would be it for the stock market. I see you have marked March of 2009 as the beginning of this 4-year stock cycle. Are you then assuming we'd decline from sometime around the middle of 2011 into Spring of 2013?

With gold having its last 8-year cycle beginning in 2008, we'd be looking for gold to gain into 2016-2017. Do you think stocks will then put in another 4-year cycle decline from 2013 into 2017, which would coincide with gold's top?

Robert,Gold and stocks run on different cycles so I wouldn't expect too much in the way of similarities.

Since the 02-09 stock market cycle stretched so long (it really was aborted by Bernanke's printing press) I expect we will see the next four year cycle contract drastically. I'm looking for a bottom in 2012. Either in March or in the fall.

We should have anotehr deflationary scare as the dollar bounces out of the three year cycle low next year. That could last a year to a year and a half.

Silver is knocking on 30 again. looks like the JPM confessional has motivated speculators to push a bit. It will be interesting to see how this turns out...whether JPM really has overleveraged short of silver, or if the story is just retail nonsense.

I would think they could easily hedge a large solver short by buying other commodities....of course, not much has outperformed silver.

I think we have a swing low in gold now, correct? How does this affect things in the short-term? Could we look for a more meaningful short-term bounce and, if so, any idea where that could end up before rolling over?

Still relatively new at following this blog, but impressed by the discussion.

Just read an interesting Bob Hoye update (http://www.321gold.com/editorials/hoye/hoye121110.pdf) that I thought might be of interest here.

He's got a Proprietary Momentum Peak Forecaster that has generated just its seventh peak signal in 40 years (!). Previous signals have been followed 1-3 months later by key peaks (commodities 1973, gold 1979, DJIA 1987, LTCM 1998, housing 2006).

This latest signal just triggered is for what he calls the "All-One-Market (AOM)". Not exactly clear what markets this includes exactly (if anyone can shed any light on it), but gather it's at least the stock market.

Correct me if I'm wrong, but this would seem to jive with talk on this blog about a top coming soon in the stock market. Hoye's rarely triggered signals would seem to point to a big correction I'm guessing, not sure how this compares to what people here are expecting.

If anyone's got any thoughts on this, would be much appreciated. Thanks!

Jablong,This was discussed ealier today. If you go through the ealier comments you will find it.

Steven,I'm not sure a swing here will mark the cycle bottom. But one could always put a stop below the recent low at $1377 under the assumption that it did and be somewhat protected from getting caught in the intermediate decline when it comes.

I also saw that the swing was put in on gold when it went to $1405 tonight...I was thinking maybe just a run up to retest the high , then a $40 plunge to set the tone later this week ( total guess , but I do use other indicators like slow stochastics and macd and r.s.i.---they look a bit oversold on gold. )

Its the perfect scenario to suck rally lovers and POMO pushers back into the MKTS --and slam them into the I.T. low. We'll see ,maybe it doesn't make it to the $1425+ area

There was an article on Zero Hedge that claimed JPM purchased 1/2 the copper in London and the speculation was that they did it specifically to hedge their silver short position. I personally think their silver short position is a combination of hedges for producers and outright naked shorts. They have made billions over the years. It will certainly be interesting to see what happens at the CFTC hearing re: position limits this Thursday.

Check your spam filters. I sent the passwords to you yesterday. If you still don't have it send me an email to garysavage@cox.net and I will repoly back to your email with the codes. Usually that will make it past the spam filters.

Insider trading is still rampant and, obviously (I'm probably preaching to the choir here) is going no where.

Last night I was researching "unusually high put volumes". What I found (this has been an extreme bull market lately so there weren't too many stocks that this alert came up for) was Best Buy. Sure enough I wake up this morning, check Bloomberg, and Best Buy will miss profit estimates by 4.4%. Now they just opened down 15.5%.

Those insiders just made millions with their options. It pisses me off...

TZ: How do you access Doc's blog? Is it not public like Gary's? All I could find was stuff from 12/7, yet you said you posted last night, and just two comments even back then at that. Can you post a link or something? Thanks.

9/11 put options are a whole new story, and IMO really open up the picture into the corruptiveness of Wall Street. It is estimated that $15 billion was profited off puts pertaining to companies affected by 9/11 that were placed days/weeks prior to the attacks.

Dylan Ratigan said that 9/11 amounted to "the worst case of insider trading ever."

http://www.globalresearch.ca/articles/HEN204B.html

This is very sad IMO. Think of if the families of the victims in the towers, as well as the families of the soldiers that have died knew about this?

Gary, aren't you sick of the fact that anyone in the media who so much as hints that skyscrapers do not collapse like THAT is immediately branded a loon and a truther?

I do not have a pet theory on the subject but as an engineer I am absolutely convinced that 3 tall modern steel-reinforced buildings would never just neatly fold in their footprint leaving surprisingly little debris.

And someone WAS buying TONS of puts on AA and UA just a few days before the event. What a coincidence...

The towers collapsed because of a structural phenomenon known as "pancaking".

The jet fuel fire melted the steel that was at the point of impact. Steel melts at relatively low temperatures. Buildings are designed so that if one structural support fails, a redundancy of systems allows the building or story to survive long enough to be successfully evacuated. Unfortunately the scope of the fire was such that all redundant structures were breached at the impact level, failing in a quick cascade. Once the structural integrity totally failed at the level of impact, the higher floors collapsed into the lower floors over-stressing different points of support in the floor below, in turn bringing those floors down on floors below them differentially stressing those supports in those floors to failure and on and on, like a vertical line of dominos. This is not the first time a building has collapsed this way. It is only the most well known.

Jennifer, you are confusing temperature with heat, rendering your whole argument regarding the melting of steel, moot.There is ample proof on the internet that shows how this was infact misunderstood and falsely dispayed.

If you look at videos of the Tower's collapse, you'll see little puffs coming out of the corners of the building many floors below where the collapsing is occurring higher up.

Also, how do you explain the very obvious demolition of building 7, across the plaza from the Towers? That had to be done by demolition.

Demolition is something that takes weeks to prepare, so whoever rigged building 7 for demo knew something a long time in advance of the planes flying into the Towers.

Moreover, the strike on the Pentagon is even weirder. NO EVIDENCE OF JET PLANE WRECKAGE ON THE GROUND? That's never happened before, there is always some wreckage lying around, tail fins, wing parts, fuselage parts... But at the Pentagon, nothing! And the plane would have had to have done this amazing 270 degree turn at high speed to hit where it did, flown by a person who had never flown commercial jets.

Finally, how is that none of our fighter jets made it into the air to intercept any of the planes after the first? We have the most sophisticated air force in the world and we couldn't get any fighter jets into the air to defend New York or the nation's capitol?? WTF!!

Well we need something to argue about to pass the time while we sit on our hands for a few weeks waiting for gold to do something. And your structural engineer title does not scare me. I have to review your drawings remember, and you don't always get it right! But I guess we should agree to disagree and get back to the money.

Jennifer, could you please tell me as an architect how tall should the pile of rubble be when a 110-story structure collapses?

And if there are any police officers out there, could you please tell me how it is possible that a crime scene where 3000 people died would be immediately dismantled and recycled before any criminal investigation could take place?

@ pimacanyon. I really was just poking around for fun and didn't want to get drug into a full scale discussion on this because neither side is going to be able to change the other sides mind for sure.

But those little "puffs" coming out of the corner of the building are most likely caused by the air that is being compressed by the collapses is creating higher air pressure inside the building and being forced out of the building at weak points or ventilation openings.

I have to agree, we all have already made up our minds about what really happened. No amount of facts or data will deter us the other way. This is a sensitive issue, and should be left alone.Much like the belief in manipulation :)

the only thing I wanted to add to that conversation was when Leo said...

And someone WAS buying TONS of puts on AA and UA just a few days before the event. What a coincidence...

If I remember correctly, that is true , but those trades were traced to taliban and the money was traced and confiscated. Now I'm not saying I do or do not believe this or that, just that I remember hearing at that time that airlines were HEAVILY shorted and a ton of money was made in the capitulation...but it was traced to those accused of the crime.

Actually, structures do come down due to fire, which is why structural steel is fireproofed in just about every building in the U.S. The fireproofing is usually one or two-hour rated, depending on the size of the building... to give people time to get out before the building comes down. In fact my father, who is a structural engineer, was saying on the morning of 9/11 that the firefighters shouldn't be allowed in the towers because there was a danger the buildings would come down on them.

That said, there is still a plethora of fishy circumstances surrounding that morning.

Okay, the puffs have an explanation. (You are the first person I have heard or read that states that jet fuel burns at a high enough temp to melt steel, but since you are an architect, I will take you at your word.)

But how do you explain building 7 coming down at 5 o-lock in the afternoon, hours after the Towers collapsed?

And what about the Pentagon, where's the wreckage from the commercial jet?

And how is it that our air defense system could have such a colossal failure?

Maybe some of these have perfectly reasonable explanations. But ALL of them?

Building 7 was hit by debris and caught fire early in the morning. From what I have heard, the sprinkler system was a dry pipe type system and needed to be pressurized manually, and it was not. There were a few attempts to put out small fires in the building but the building was evacuated successfully and attention was needed elsewhere. The building burned from early morning and finally collapsed around 5 that evening. If that building was demo'd by terrorists, they were really bad at what they were doing.

Pima - I don't know anything about the Pentagon building. Large scale structural failure is much more interesting to me then mysterious holes. I have nothing to add to that discussion one way or the other.

Merry Christmas everybody! I haven't been doing any trading, instead enjoying this time off (with very juicy profits already booked for the year).

Regarding 9/11, my thought it was an inside job. I've never seen buildings collapse straight down (and get demolished to dust) except in demolitions. Some say Israel used 9/11 as a false flag attack to get us into wars in the Middle East. After all, Mossad's motto is "through deception we wage war". Perhaps we'll know for sure one day soon.

As a retired Air Force pilot I can tell you that it doesn't all happen like in the movies. :-)

You wouldn't believe the amount of bureaucracy involved, and it's really not hard to believe that REAL people would not instantaneously decide to intercept and shoot down a domestic airliner. It's not as clear cut as you might think. And the "fog of war" is quite disorienting.

No mattter how sophisticated the communications technology, when you have something like this develop, when nobody was on guard for it, and so many agencies, with a long chain of command, etc., it ends up taking quite a bit of time to take real action. Again, it's not like in the movies.

All that said, I've never spent huge amounts of time studying this whole thing to become an expert. So that's all I've got to say about it.

10yr rates keep ticking higher and higher. Straight up since QE2. The bluff is starting to be called!!

Meanwhile stocks blatently ignore this situation as they have done many times in decades past...until they don't. A powder keg is building up here.

Finally, mortgage rates appear to have definitively bottomed and turned this time as the world no longer has an appetite for US govt debt (it's now up to the FED to buy). As rates rise, it marginally lowers the ability of debt to finance or carry debt on such overpriced real estate (remember my rent times 100 metric = sale price). Thus, the sharply increasing mortgage rates are now slowly squeezing out and starving real estate. The next wave down is coming.

Good mortgage rate link to bookmark:http://www.bankrate.com/funnel/graph/

Oh, my mistake. You had said it's the "Jewish Mafia" who caused the economic problems we now face. If we just got rid of Israel and the Jews the world would be so much better off...Oh wait that's been tried. Maybe stop blaming others for the anger and frustration in your life.

Well, I am not a Jew hater, but I do have to wonder why the US gives the equivalent of over $2000 to every Israeli citizen to Israel every year in the form of "foreign aid" when we give next to nothing to surrounding Arab states. How does this enhance our national security??

(I forget the name of the guy in the US State Department who some years ago said "We can't kill terrorists as fast as the State Department is creating them.")

Okay, last political post of the day... Trading is a little boring today, everyone waiting on FOMC--as if anything Uncle Ben says could possibly come as a surprise!

That's right Mishpucka, but that was a different conversation. I see we've read our Hasbara manual!

Readers should search "Hasbara" to read up on what we're talking about.

Israel is a terrorist state and anybody that wants can see videos all over the internet. Our "ally" doesn't give anything to the US, while we just gave them $3 billion worth of fighter jets JUST to get them to stop building illegal settlements for only 60 days. The relationship is abusive to Americans and most are still unaware of just how bad it is.

TZ: Yeah, the rise in rates is alarming. At the same time, though, the "death of the bond market" is now consensus based on the sentiment polls. So do we just bounce to relieve that bearishness, or start a new leg higher in bonds? People have been calling for big headline inflation for long time and that day of reckoning just keeps getting put off. I can't see why we can't do another leg higher in bonds to at least challenge their price highs...?

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